What is a foreclosure property? What is an REO?

Just about everybody has some idea of what a foreclosure is, but not necessarily an REO. So here's the scoop. A foreclosure is a property that has been repossessed by a lending institution after the property owner has defaulted on paying their home loans. The lending institution must go through a series of legal steps during the foreclosure process, which takes a minimum of 121 days, although banks might decide to prolong the process several more months. At almost any time before the property forecloses, the homeowner may be able to reinstate the loan by paying off the default amount and late fees, thus stopping the foreclosure process.

If the homeowner is unable to work out a solution with the lender, the foreclosure process is completed and ownership of the property goes to the lender. Then the property is known as an REO, which is short for Real Estate Owned by the bank. Since banks are not in the business of owning property, they are motivated to sell them quickly. Most turn REOs over to an asset manager who lists the property for sale through an REO listing agent - usually a Realtor^® who is a member of a Multiple Listing Service (MLS).

For greater detail, grab a cup of coffee and read more on the following page.